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Luzerne councilman questions property tax abatements

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Luzerne County Council will take up Keystone Opportunity Zones next week after council Vice Chairman Edd Brominski noted the cash-strapped county allowed hundreds of millions of dollars in property tax abatements last year.

Speaking during the council's economic development/real estate committee meeting Tuesday night, Brominski said he had encountered some "interesting but disturbing" information in correspondence with Director of Assessments Anthony R. Alu.

According to an email exchange in October, Alu reported the predicted 2014 total taxable assessed value in the county was $19.8 billion, an increase of about $12 million from 2012. About $389.8 million in assessed value was abated, he wrote.

"He told me that there was $401 million new assessments picked up from September of 2012 to November of 2013, and of that $401 million, $389 million was abated," Brominski said Wednesday, adding that the stated reason was KOZs. "I want some answers. â¦ I cannot believe that KOZ accounted for $401 million - that $401 million of KOZ property came off the rolls and then was abated."

During the meeting Tuesday, Brominski told members of the Luzerne County Board of Tax Assessment Appeals that abating more than 90 percent of new assessments was "absolutely ludicrous."

Board members told him they were not aware of abatements to that extent.

"Nothing like that ever came before us," Neil J. Allen said.

Reached Wednesday, Alu said abatements don't only include KOZs - razed buildings, board appeals and Local Economic Revitalization Tax Assistance properties all can result in property abatements.

"KOZs are part of it, because believe it or not it's not an exemption program," Alu said, adding that businesses in KOZs must get approval from the state every year for exemptions. "They're on the rolls until we get a letter stating that they met all the criteria and, 'Yes, we are accepting them for this year.' And contrary to belief, they're not always accepted. I've had a couple over the years that have not been."

Because they need yearly approval, properties in active KOZs show up as abatements each year, he said.

Several council members have expressed concerns about KOZs, noting that council recently approved a zone in Hanover Township for a proposed warehouse facility a Texas-based developer, Trammell Crow Co., claimed would bring more than 1,100 jobs and $44 million in wages to the area.

The property was assessed in 2013 at $355,500, and terms of the contract call for the county to accept annual payments in lieu of taxes based on that number - the value cannot go up because of improvements to the property.

After getting the KOZ approved, the Earth Conservancy, which spent millions reclaiming the mining site at Hanover Industrial Estates, sold the property last week to TC NE Metro Development Inc. of Conshohocken for $11 million.

TC NE Metro Development turned around and immediately sold the property to developer KTR Property Trust III for $18.2 million, according to deed records.

Councilwoman Kathy Dobash called that turn of events "disturbing."

"Within a week after the KOZs approved, it's flipped and the company profited by $7 million," Dobash said. "I think this needs more investigation and we need to further protect the county's ability to generate revenue."

The committee unanimously voted to address the impact KOZs have on the county at next week's committee of the whole.

Council is also looking to assess the county's land assets to determine what properties it can sell.

County Manager Robert Lawton said the assessor's office is compiling a comprehensive list of properties for council.

"It's not our key properties that we're thinking of, but all of the properties including those that are landlocked that may be amenable to sale to adjacent property owners," Lawton said.

Councilman Harry Haas said in an email to fellow committee members Wednesday that he hopes KOZ properties are included in a list of county property Dobash requested.

"I feel that divesting ourselves of property should be the number one priority of this committee," Haas wrote.

Committee members are considering attending a state Department of Environmental Protection Brownfields seminar next month addressing redevelopment of contaminated land. The committee also noted officials in Pittston are working to create a land bank, a public agency that allows the city to buy and manage abandoned properties.

"Both brownfield mitigation and land banking align with our goal of getting property back on the tax list," Haas wrote.

jhalpin@citizensvoice.com

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